Custom Search
|
|
7 Reasons And False Assumptions That Caused The Housing Crisis - False Assumption #7
The current systems for access risk and rates of return on real estate portfolios rely on assumptions that are based on general trends and prices that reflect past activity more than the property’s real future prospects. They tend to place insignificant attention on the location of the property and various local-level factors that influence real estate markets. Therefore, because these systems often rely on expectations of future risks and returns based on the past market conditions, they need to be updated to comprise more accurate and timely local-level trends and prices. Local property market conditions—with various factors affecting supply and demand, and thus prices—represent a major determinant of the risk associated with property ownership. When the local market conditions are stable, property investors tend to perceive the risk of property ownership as lower and, consequently, require a lower rate of return. In this context, the local economic factors, such as employment and income, have a major impact on the property ownership risk and the required rate of return. This is so because local real estate markets usually move in tandem with the local economy. As a result, a prosperous local economy will entice property investors to consider a property located in a thriving market less risky, and, thereby, to require lower rates of return. The opposite would apply to properties located in the communities whose local economies are struggling. With all this in mind, the Home Value Predictor serves as an exceptional tool that integrates diverse economic and socio-demographic variables so as to facilitate investors’ assessment of risk and rates of return on property investments. It also provides local market indicators that are more reliable than those applied by the current systems used to calculate required rates of return. Thus, the Home Value Predictor is tool that can help investors select those properties that boast the highest return potential. For more information, visit www.HomeValuePredictor.com and click the link to purchase my book titled “The Missing Keys to Thriving in Any Real Estate Market.” http://twitter.com/EddieGodshalk Article Directory: http://www.articledashboard.com |
|